Thursday, August 23, 2012

CBO Reduces Medicare Spending Forecast

The Congressional Budget Office (CBO) reduced its spending forecasts yesterday from earlier this year for Medicare by $19 billion for 2012 and by $169 billion over the coming decade, projecting total spending at $7.7 trillion for the 10 years ending in 2022, according to Reuters.

The change reflects lower spending growth for physicians, hospitals, and prescription drugs since the US economy went into recession in 2007. CBO states the slower growth of Medicare is "consistent with slower growth in health care costs more generally in the economy." This is the third consecutive year that CBO has reduced its forecasts for Medicare spending, says the article.

CBO also predicted that Medicaid would also spend less money--$375 billion or 7% less than expected over the coming decade. This projection changed largely as the result of the Supreme Court's decision allowing states to choose whether or not to expand eligibility for coverage under their Medicaid programs.